9911796707
TMI Blog2019 (10) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... and without taking recourse of issuing notice u/s 131 of the Income Tax Act, 1961, to these persons. 4. The appellant craves leave to add, amend, alter, vary and/or withdraw all or any of the above grounds of appeal. 2. At the time of hearing, no one was present on behalf of the assessee and an adjournment application was moved. Mr. Tej Mohan Singh as Proxy Counsel for the arguing counsel. However, it was seen that detailed submissions of the assessee stand extracted in the impugned order itself. Accordingly, it was deemed appropriate to proceed with the appeal on the basis of material available on record. In the circumstances, the adjournment request was passed over requiring the parties especially the ld. CIT-DR to address the record. 3. In the second round, the ld. CIT-DR was heard. He was specifically required to go through the detailed submissions extracted in the order and address his submissions justifying the order passed where the facts had not been upset. The ld. CIT-DR vehemently relying upon the order of the CIT(A) drew specific attention to the findings arrived at in pages 39-40 in para 6.3. Referring to these observations, it was his submission that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these two persons since were no longer associated with the assessee, accordingly could not be produced. However, reliance was placed on the supporting evidences on the basis of these it has been argued that relying on similar disallowance the AO has accepted the claim for the five persons, thus similar set of documents, it is seen has been argued for these two parties could not be discarded. The assessee reiterated its reply dated 12.12.2011 made before the AO that "since these persons have left the dealings with the assessee, hence these persons cannot be physically produced before learned A.O. for recording of their statements." It was further reiterated that the necessary details in regard to acknowledgement of their return of Income; their PAN number and TDS Certificate etc. alongwith sworn Affidavits of these two persons had been made available to the AO. The record shows that it was argued that in case the presence of these two persons was considered necessary, the AO having sufficient powers vested in him by the Act by way of Section 131 could direct the presence of these persons. The assessee, it has been argued had no authority to command their presence. The specific natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed. MJs. Matrix Pharmaceuticals, Gorakhpur, MJs. R.K. Enterprises, Gorakhpur, M/s. Swati Drug Agencies, Gorakhpur and MJs. Sharda Medical Agency, Partapgarh, had also issued confirmation letter regarding services rendered by this agent on behalf of the assessee, which were also filed during the course of assessment proceedings alongwith the reply dated 12.12.2011, filed against the show cause notice dated 05.12.2011. The turnover achieved through these four parties amounts to Rs. 47,14,058/- which constitutes 76.34% of the turnover achieved by this person. The copy of the Income Tax Return filed by him, copy of duly sworn in affidavit, photocopy of the confirmation letters received from these four parties are enclosed. 7. That the expenditure of commission was wholly and exclusively for the purpose of business of the assessee, as the assessee was able to boost its turnover from Rs. 718.27 Lac during the assessment year 2008-09 to Rs. 1,058.35 Lac during A.Y. 2009-10, registering an increase by 47.35% which cannot be doubted as the same was duly reconciled with VAT returns during the course of assessment proceedings. The increase in turnover has enabled the assessee to file it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whom these persons had rendered their services on behalf of the assessee. All the payments were made through account payee cheques. Both these persons were genuine and are not related to the assessee. Moreover, there was considerable increase in sales as well as profitability. None of these documents have been rebutted/disowned by the learned A.O. in his assessment order. Rather, same set of documents have been accepted by learned A.O. in case of five out of seven agents. c) That the learned A.O. has not given any specific findings regarding the non-genuineness of the commission paid to these persons." (emphasis supplied) 5.6 The ld. CIT-DR was specifically required to address these submissions which have been left unaddressed by the CIT(A). However, in the absence of any discussion thereon, in the order no meaningful argument could be advanced. It is further seen on a perusal of page 35 of the impugned order that the assessee voicing its objections to the AO's comments has specifically submitted that the AO infact did not afford sufficient opportunity and also re-iterated that these were not related parties. It was claimed that these agents had effected sales which had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence with regard to the work done by these two persons ". In this regard, it is submitted that the order has been passed so abruptly on non-production of the commission agents that the assessee was never allowed any opportunity to present the same as explained above. 2.4 Now, it is submitted that the total commission incurred for the year has been paid on the sales affected by the commission agents. The impugned two commission agents have also affected sales for the assessee. The one commission agent namely ShilpiTondon has affected the sales made to Medilloyd Pharmaceuticals, Municipal Complex, OMP Square, Cuttak and the other agent namely Abhay Paul Jaiswal has affected the sales made to 13 different buyers. The details of the same depicting the dates on which the sales has been made to the said concerns and the commission incurred on the same along with the sworn affidavit, photocopies of the confirmation letter of Medilloyd Pharmaceuticals, Mis Matrix Pharmaceuticals, MJs R.K. Enterprises, M/s Swati Drug Agencies & MJs Sharda Medical Agency have already been filed before your goodself. 2.5 From a perusal of the above Annexure, it is very much clear that the commission ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verify the genuineness of commission payments. When asked as to whether the assessee is ready to produce the persons now for verification, the learned AR of the assessee has shown his inability in this regard. It means, the assessee is not ready to produce the persons to whom the commission payments have been made inspite of the fact that he has been allowed opportunity to do so during appellate proceedings. It has also been noticed that no such request has been made during assessment proceedings otherwise the Assessing Officer must have used his powers to call for the persons for verification and to-verify the genuineness of commission payments. It may be noted that the assessee has himself produced five persons out of seven persons to whom commission has been paid and the Assessing Officer has also allowed commission expenses in respect of five persons who were produced. It means, the Assessing Officer was very fare in his approach. I am, therefore, of the opinion that the commission payments to remaining two persons who were not produced cannot be treated as genuine and as such the action of the Assessing Officer does not need any interference." 5.11 Considering the facts as se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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